A Deep Dive into Ventuals Protocol—Why Being Wrong Taught Me More Than Being Right
A brutally honest technical journey through cross-layer staking, L1/L2 timing vulnerabilities, and what I learned from earning $0 in my first bug bounty.
Five days. One protocol. Four findings. One duplicate and three rejections.
It was 2 AM on day three when I thought I’d found it. The L1Read precompile wasn’t giving me real-time data—it was showing me a snapshot from the beginning of the block. I watched my PoC execute:
After Op 1: nPendingWithdrawals = 4
After Op 2: nPendingWithdrawals = 4
Same block: true
[SUCCESS] Both operations see IDENTICAL stale value!“This is it,” I thought. “A real cross-layer timing vulnerability.”
I created a proof-of-concept, cited documentation, and calculated probabilities, and pushed back when rejected with “no substantiated evidence.” I was certain I was right.
BUT I was wrong.
Nonetheless, my proof passed. What went wrong with it? Of course, the actual proof of concept. While I intended to simulate the problem by running the else block, the PoC ended up satisfying the if condition instead. As a result, execution flowed through the stake path rather than unstake, and the transaction completed successfully. Since the critical guard was never reached, the PoC failed to demonstrate the claimed break in behavior, leading to the issue being marked invalid.
Disclaimer
This is not about wins and payouts, but about the humbling experience of being wrong, the valuable lessons learned, and why my “failed” contest taught me more than a successful one would have.
So what does this mean?
A valuable experience with lessons learned.
- 1 duplicate—Someone just beat me to it
- 3 rejections—I learned what separates bugs from design choices and the importance of submitting well-thought-out POCs.
What You’ll Learn
By the end of this post, you’ll understand:
- How cross-layer staking works (L1 ↔ L2 communication)
- The subtle timing vulnerabilities in blockchain state reads
- Why “it’s a feature, not a bug” is the auditor’s eternal nemesis
- The difference between theoretical and practical vulnerabilities
Let’s dive in.
What is Ventuals?
Imagine you want to earn yield on your crypto (HYPE tokens) by staking them with validators. But you also want that staked crypto to remain liquid—usable in DeFi protocols. That’s what Ventuals solves.
In one sentence: Ventuals is a liquid staking vault that stakes your HYPE tokens on Hyperliquid’s L1 (HyperCore) while giving you vHYPE tokens on L2 (HyperEVM) that represent your staked position.
The Innovation:
- Deposit HYPE to receive vHYPE (liquid staking derivative)
- vHYPE accrues staking rewards automatically via exchange rate
- Use vHYPE in DeFi while earning APY from staking
- Withdraw anytime (with batch queue period)
Architecture Deep-Dive
The Core Innovation: Cross-Layer Communication
Ventuals operates across two layers of Hyperliquid:
- HyperCore (L1): The consensus layer where actual staking happens
- HyperEVM (L2): The smart contract layer where vault logic lives
This architecture requires constant synchronization between layers, which introduces timing vulnerabilities—the focus of my most interesting finding.
Key Technical Concepts
- Exchange Rate & vHYPE Value—When you deposit HYPE, you receive vHYPE at the current exchange rate. This is how yield accrues to token holders.
//Exchange rate formula
exchangeRate = totalBalance() / vHYPE.totalSupply()
// Where totalBalance() includes:
totalBalance = stakingAccountBalance() // Staked on L1
+ spotAccountBalance() // Unstaked on L1
+ stakingVault.evmBalance() // On L2
- reservedHypeForWithdraws // Queued withdrawalsvHYPE is not rebasing—it’s the exchange rate that increases, making each vHYPE worth more HYPE over time.
2. Withdrawal Batching—Ventuals doesn’t process withdrawals instantly. Instead, it uses a batch system to optimize L1 operations and gas costs.
The Withdrawal Flow:
- User Queues Withdrawal
- Batch Processing
- Batch Finalization
- User Claims
3. The L1Read Timing Issue
When the StakingVault contract reads the HyperCore state via L1ReadLibrary, it receives a snapshot from the BEGINNING of the current HyperEVM block, not the real-time state.
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Why This Matters:
If multiple operations occur in the same block:
- Read the L1 state (via L1Read).
- Modify the L1 state (via CoreWriter).
Later operations observe the STALE state from earlier in the block.
The Findings:
Now let’s walk through each finding, the code vulnerabilities, and crucially why some were rejected and what I learned.
- Users Can Escape Slashing by Canceling Withdrawals
Description—Users can exploit the withdrawal cancellation mechanism to escape slashing penalties by monitoring the vault’s exchange rate and canceling their withdrawals if a slash occurs before their withdrawal is processed into a batch.
function cancelWithdraw(uint256 withdrawId) external whenNotPaused {
Withdraw storage withdraw = withdraws[withdrawId];
require(msg.sender == withdraw.account, NotAuthorized());
require(withdraw.cancelledAt == 0, WithdrawCancelled());
require(withdraw.batchIndex == type(uint256).max, WithdrawProcessed()); // Can only cancel unprocessed withdraws
// Remove from the linked list
withdrawQueue.remove(withdrawId);
// Set cancelled timestamp
withdraw.cancelledAt = block.timestamp;
// Refund vHYPE
uint256 vhypeAmount = withdraw.vhypeAmount;
bool success = vHYPE.transfer(msg.sender, vhypeAmount);
require(success, TransferFailed(msg.sender, vhypeAmount));
emit CancelWithdraw(msg.sender, withdrawId, withdraw);
}This makes an exploitable window available for free, allowing users to:
- Queue a withdrawal when the exchange rate is favorable
- Monitor the HyperCore L1 for slashing events
- Cancel their withdrawal if a slash occurs and the exchange rate drops
- Wait for the exchange rate to recover from future staking rewards
- Re-queue their withdrawal at a better rate
The root cause is the lack of any constraint that prevents cancellation after adverse events (slashing) occur.
Team’s Response:
“This describes expected economic behavior, not a vulnerability. When a user cancels their withdrawal, they receive vHYPE back at the current slashed exchange rate. They haven’t escaped the slash because they still hold a devalued asset. The slashing loss affects all vHYPE holders proportionally via the exchange rate.”
Learning—Users who cancel withdrawals after a slashing event will naturally receive less HYPE due to the reduced exchange rate. Rather than framing this as “escaping the slash,” it’s more accurate to describe it as gaining an unfair advantage.
2. First Batch Exchange Rate Lock Causes Complete Loss of Staking Yield for Early Users
Description—The core idea was that certain initialization conditions can unintentionally disadvantage early participants if value-accrual logic and withdrawal logic are not perfectly aligned from block zero.
Team’s Response:
Duplicate
3. Lack of Slippage Protection Enables MEV Exploitation on All Deposits
Description—The deposit() function lacks slippage protection, allowing users’ deposit transactions to execute at exchange rates significantly different from what they expected when submitting the transaction.
This vulnerability affects all deposits, not just the first one, and enables MEV (Maximal Extractable Value) attacks where malicious users can monitor the mempool and exploit pending deposits by front-running or back-running based on exchange rate movements.
function deposit() external payable canDeposit whenNotPaused {
uint256 amountToDeposit = msg.value.stripUnsafePrecision();
// Mint vHYPE
// IMPORTANT: We need to make sure that we mint the vHYPE _before_ transferring the HYPE to the staking vault,
// otherwise the exchange rate will be incorrect. We want the exchange rate to be calculated based on the total
// HYPE in the vault _before_ the deposit
uint256 amountToMint = HYPETovHYPE(amountToDeposit);
require(amountToMint > 0, ZeroAmount());
vHYPE.mint(msg.sender, amountToMint);
// Transfer HYPE to staking vault (HyperEVM -> HyperEVM)
if (amountToDeposit > 0) {
stakingVault.deposit{value: amountToDeposit}();
}
emit Deposit(msg.sender, amountToMint, amountToDeposit);
}Ventuals forces users to accept whatever exchange rate exists at execution time, even if it has changed substantially since transaction submission.
This creates information asymmetry where mempool-monitoring bots have a significant advantage over regular users.
Team’s Response:
“This is standard ERC4626 share-based calculation. Dynamic rate is intentional. Slippage is accepted in standard vaults and negligible mostly.”
Learning
- ERC-4626 vaults aren’t AMMs.
Share-based vaults are intentionally minted at the current exchange rate and don’t require explicit slippage protection by default. - Not all deposits are MEV targets.
Vault deposits don’t create the same sandwich or front-running opportunities as swaps unless tied to a volatile external price source. - Context beats patterns.
Staking vaults have slow, reward-driven exchange rate changes, making slippage and MEV far less realistic than in trading pools.
4. L1Read Timing Issue Allows Exceeding HyperCore’s 5-Pending-Withdrawals Hard Limit
Description—The unstake() function in StakingVault uses L1Read precompiles to check if the number of pending withdrawals is below HyperCore’s hard limit of 5.
However, due to L1Read precompiles returning state from the beginning of the HyperEVM block, multiple unstake() calls within the same block can bypass this check and exceed the limit, breaking a critical system invariant and causing HYPE to become stuck in a non-earning state.
function unstake(address validator, uint64 weiAmount) external onlyManager whenNotPaused {
if (weiAmount == 0) return;
require(whitelistedValidators[validator], ValidatorNotWhitelisted(validator));
// Check: Must have < 5 pending withdrawals
L1ReadLibrary.DelegatorSummary memory _delegatorSummary = L1ReadLibrary.delegatorSummary(address(this));
require(_delegatorSummary.nPendingWithdrawals < 5, MaxPendingWithdrawals());
_undelegate(validator, weiAmount);
CoreWriterLibrary.stakingWithdraw(weiAmount);
}From Hyperliquid’s Official Documentation:
“State read by L1Read precompiles reflect the state at the beginning of the HyperEVM block.”
The impact of this finding becomes significantly more severe when the system is already near its enforced limit, specifically when nPendingWithdrawals = 4.
At this point, the contract is one call away from reaching the maximum allowed pending withdrawals. The unstake() function attempts to enforce this limit by reading nPendingWithdrawals via the L1Read precompile and requiring it to be less than 5. Critically, any subsequent unstake() calls within the same block still observe the stale value of 4 on L2 and continue to pass the check.
When these actions are later applied on L1, they violate the MaxPendingWithdrawals invariant and revert, creating a divergence between L2 execution and L1 settlement.
Team’s Response
“When calling
finalizeBatchafter theemergencyStakingWithdrawfunction call, thefinalizeBatchcallprocessBatchwhich internally calls the_fetchBatchfunction which calls tthe functionStakingVault.delegationwhich internally calls the_getDelegationfunction which checks that it islastDelegationChangeBlockNumbergreater than the current,block.numberwhich eventually fails andfinalizeBatchthe call reverts, causing no pending withdrawal limit bypass.”
Learning—A solid intuition about the bug isn’t enough. The PoC must precisely force the contract into the exact state and branch where the failure occurs. Any deviation, even a subtle one, can invalidate an otherwise reasonable finding.
The Unexpected Win
This post exists precisely because not all of my findings were accepted. Moving on would have been easier, but sitting with the rejections forced a deeper retrospective, and that process surfaced lessons I wouldn’t have found otherwise.
The $0 payout forced me to extract value in new ways by learning, sharing, and growing.
